Abstract
Ethical consumerism is one of this century’s retail success stories and has continued to grow despite the global pandemic and economic contraction. Consumers worldwide are increasingly putting their money where their values are in purchases of food and drink, clothing, housing, and financial and other services. Understanding these consumers is key to competing successfully in markets for ethically sourced products and presents opportunities for reducing poverty in developing countries where food and agricultural production is the dominant economic activity, such as small island developing states (SIDS) in the Pacific. While ethical consumerism is an expanding research field, findings rarely are analysed in detail for market development. Rarer still is segmentation in terms of product attributes aimed explicitly at poverty reduction in slow-growth, emerging economies like those of the Pacific. Here we report a latent class cluster analysis of survey responses by ethically conscious Australian consumers (n = 637) associated with Oxfam, the development charity. Four distinct consumer segments were identified with implications for Pacific producers. Product origin and ‘the story behind the product’ were particularly important to these consumers. The findings provide practical insights to agricultural stakeholders in the Pacific and those similarly situated around the globe that are in need of new economic opportunities.
1. Introduction
1.1 Ethical consumerism and the Pacific context
The number and proportion of food consumers concerned with the ethical sourcing of products and the equitable distribution of economic benefit from their sale have grown substantially in the developed world since the turn of the century (Beldad and Hegner, 2018; Coop, 2021; Nicholls, 2002). The rate of increase in ethical consumerism is predicted to increase worldwide as the incomes of Millennials in developed economies rise (Bollani et al., 2019). While consumer research on demand in large, developed markets for food and drink products that satisfy ethics-based goals is widespread and growing, studies exploring the different characteristics of consumers attracted to products which benefit low-income producers in smaller emerging markets are rare (Bangsa and Schlegelmilch, 2020). Small island developing states (SIDS) in the Pacific region, which desperately need growth and development opportunities matching their competitive strengths, need precisely this sort of consumer research to gain insight into these markets. The Pacific region is home to 25 political entities, including independent states, territories and other dependencies (McGregor, 1999). The larger nations in the region include Fiji, Papua New Guinea, Solomon Islands, and Vanuatu. Food production is the dominant economic activity of the populace on the vast majority of these remote islands, where annual per capita income tends to be low, in the USD$2000–6000 (IMF, 2022) range.1
International trade and economic growth are essential for lifting undeveloped nations out of poverty (Chen et al., 2014; McGillivray et al., 2008). Pacific nations generally have been unable to capitalise on evolving food production and distribution systems, and so have missed market opportunities that emerged with globalisation (Croes, 2006; Douglas, 2006; Pelling and Uitto, 2001). Even the larger Pacific countries have difficulty attracting substantial global companies capable of providing beneficial economies of scale (Josling, 1998). Instead, these countries must focus on existing areas of competitive advantage, such as agriculture and tourism (Gani and Scrimgeour, 2019), which already make up a significant part of their gross domestic product (GDP) (Chen et al., 2014; McGregor, 2010).
The inclusion of smallholder farmers in the development of any new or expanding market opportunities is a vital part of poverty-reduction strategies in low-GDP countries where agriculture is the dominant economic activity. Understanding the characteristics and preferences of consumers interested in purchasing food products from low-income producers in developing countries, of which SIDS form a special class, is therefore critical to identifying new market opportunities.
When considering potential target markets for key trading Pacific countries such as Fiji, Australia is a logical choice, with approximately 41% of all tourist arrivals into Fiji in 2019 coming from Australia (FBOS, 2019). Australia is also one of Fiji’s most important trading partners (Chand, 2019). It is the biggest investor in Fiji (Yang, 2011), and in 2010, Australia was the largest destination for Fijian products taking 21% of all Fijian exports (Gani and Scrimgeour, 2019).
Navigating the literature on ethical food consumption presents challenges because it is already extensive, spread across various disciplines and fields, and published in a variety of non-specific specialist journals using heterodox terminologies (Carrington et al., 2021). In important ways, it also paints a somewhat contradictory picture. Top of the list is the repeated finding that professed attitudes about ethical consumption do not always translate into purchasing behaviour (Bray et al., 2011; Burke et al., 2014; Carrington et al., 2014). Some studies have found that demographics substantially influence ethical consumption, for example, that ethics-driven buying is predominantly found in women (Bucic et al., 2012) and that values associated with such purchasing behaviour are likely to increase with age (Hines and Ames, 2000; Pelsmacker et al., 2006). Other studies have highlighted conflicting relationships between ethical values and demographic factors, or concluded that demographics are unreliable predictors of ethical purchasing (Bray et al., 2011; De Pelsmacker et al., 2005). Recent research examining consumers’ awareness and/or perceptions of ethical attributes of food production and purchasing behaviour found a high degree of heterogeneity (Bangsa and Schlegelmilch, 2020; Palacios-González and Chamorro-Mera, 2020; Park, 2018), which suggests differentiation of consumers on the basis of socioeconomic, attitudinal and behavioural characteristics should be productive.
1.2 Objective of the Oxfam Australia/University of Adelaide ethical consumption survey
The study described here was instigated in partnership with Oxfam Australia. Oxfam is one of the largest ethically conscious organisations with a database of 55 000 donors, retail customers and mailing list subscribers in Australia. Oxfam management was interested in sourcing more products from the Pacific region for its retail stores, and our research team was interested in understanding ethical consumer market opportunities for Pacific exporters, so we collaborated to develop an online survey. The survey resulted in the segmentation of 637 ethically conscious Australians.
The aim of the collaborative study was to better link ethically conscious Australian consumer markets to developing communities by focusing mainly on food and other agricultural products from the Pacific Islands, which hold a special place historically in Australia’s foreign aid and security policies, to say nothing of tourism. Oxfam Australia sought to better understand supporters’ and customers’ product preferences as well as actual and potential buying behaviour. The survey was developed to gain consumer data in four key areas: (1) socio-demographics; (2) purchasing behaviour at Oxfam retail outlets, both bricks-and-mortar and online; (3) consumer preferences; and (4) opportunities for Pacific products. Multiple studies have shown that consumers who are positive about ethical products are also willing to pay more for them (De Pelsmacker et al., 2005; Lappeman et al., 2019; Sama et al., 2018; Verain et al., 2016), which underscores the rationale for studying and segmenting consumer groups aligned with organisations such as Oxfam. A better understanding of a relatively defined segment of the Australian market for ethical consumption will provide insights for exporters and policymakers concerned with economic development and improving household incomes of primary producers in the Pacific.
Research has previously suggested that Pacific island provenance might be perceived as more ‘natural’ and ‘pure’ or more socially responsible or environmentally friendly (Connell, 2006; Jones et al., 2017). A case in point is Fiji Water which is exported to over 40 countries in the highly competitive global market for bottled water (Jones et al., 2017) and is valued at over USD$ 35 billion (Jones et al., 2017; Reddy and Singh, 2010). Marketing themes of ‘clean’ and ‘pure’ were critical to Fiji Water’s success (Connell, 2006), together with a consumer belief that the company is ethically and socially responsible (Jones et al., 2017) – this is despite Fiji Water never having been certified as such. The remarkable success of Fiji Water seemed to point to the latent export potential of niche products from Fiji and the Pacific.
The paper is organised as follows. Section 1 describes the genesis and justification of the research. Section 2 covers the relevant literature on ethical consumption and the background on Fairtrade certification and Oxfam. Section 3 describes the methods used, data collection and analysis details. Section 4 sets out the results in a series of tables, which are linked back to the research objectives. The discussion in Section 5 and conclusion in Section 6 suggests the work’s contribution to and implications for different stakeholders and discusses the limitations and possible future directions for research.
2. Literature review
2.1 What is ethical consumption?
In one sense, investigation and discussion of the ethics of consumption are as old as philosophy and religion (Holbrook, 1994). Problems of clarity and consensus arise when “precise conceptualisation and delineation of the construct” of ethical consumerism is attempted in the academic sphere (Wooliscroft et al., 2014). In the interests of brevity, we will side-step academic debates about the definition, in favour of a characterisation pitched to a non-specialist reader with which (we believe) few would take issue:
“At face value, ethical consumerism is the idea that your consumption has an impact on the world, so you want that impact to align with your values. This means understanding the footprint of the products you consume, how they were made, and how they will be disposed of (Kim, 2022).”
The crux of ethical consumerism is to avoid economic choices that damage the environment or cause harm to living communities around the globe and to promote or support efforts that benefit the environment, people and/or other classes of living things. Topics and issues that often arise in this space include sustainability and related ‘green’ concerns (Diamantopoulos et al., 2003); organics (Tallontire et al., 2001); fair trade (De Pelsmacker et al., 2005); workers’ rights (Barnett et al., 2005); animal welfare, country of origin, and health related issues (Carrington et al., 2010; Wooliscroft et al., 2014). The most frequently researched aspects of ethical consumerism, identified by researchers of a study that characterised ethical consumption in New Zealand, appear to be (1) environmental concerns/green consumers; (2) fair trade (often associated with single product categories, such as coffee or chocolate); (3) voluntary simplicity or downshifting; (4) anti-consumption; (5) consumer ethics, including its moral dimension; and (6) the attitude-behaviour gap (Wooliscroft et al., 2014).
The value of the global ethical consumption market is unknown and difficult to estimate, but the growth of ethical consumerism in the UK over the past two decades may be instructive. According to The Co-op (formerly the Cooperative Bank) and Ethical Consumer, two UK-based non-profit organisations that have jointly reported on ethical consumption patterns for the past two decades, the value of ethics-based consumerism in the UK alone increased more than 10-fold between 1999 and 2020, from £11.2bn to £122bn (Coop, 2021). Although 2020 was the first year of the COVID-19 pandemic, when lockdowns were common and lengthy, ethical consumerism “broke through the £100bn mark” and finished the year 23.7% higher than the previous year (Coop, 2021). These figures reflect five main categories: ethical food and drink, green homes, eco-travel and transport, ethical personal products, community building, and as ‘ethical money’ and boycotts of products and services considered unethical. In short, the ethical consumer market is substantial and growing rapidly. The opportunity to capitalise on this trend could be life-changing for poor producers and value chains in low-income developing economies.
2.2 Facilitating ethical consumption: Fairtrade and Oxfam
Over the past two decades, the unrivalled standout in the ethical consumption space has been Fairtrade, one of the oldest ethical certification schemes worldwide, which is now a “well-established part of mainstream consumer decision-making” (Coop, 2021). In The Netherlands, for example, the number of households buying Fairtrade products increased nearly threefold in a decade, from 24% of Dutch households in 2007 to 69% in 2016 (Beldad and Hegner, 2018). In addition to the growth of Fairtrade in developed countries, there are also examples of strong growth in emerging markets, such as South Africa, which experienced a 220% increase in Fairtrade sales in 2012 (Hughes et al., 2015). According to its own figures, Fairtrade’s global network includes more than 1.9 million small-scale growers and workers in Latin America, Africa, the Middle East, Asia and the Pacific (Fairtrade, 2021a), that produce ingredients and products global consumers use every day. Fairtrade products range from fruit and vegetables, cane sugar, coffee, tea, cocoa, cotton, honey, herbs/spices, flowers and plants, rice, nuts/oil and quinoa to composite products (e.g., chocolate bars, cookies, ice cream), wine, sports balls, textiles and gold (Fairtrade, 2021b).
To the consumer, Fairtrade certification indicates that growers and other producers receive a premium over and above the market price for their products, ensuring their costs are covered, and they have access to credit when they need it during the production cycle. It also means that along the value chain, workers are treated fairly, child labour is not used, and environmentally sustainable methods are employed. At the heart of the enterprise is the transparent documentation of value chains for compliance regarding multiple issues of concern for each item produced and sold (De Pelsmacker and Janssens, 2007; Kim et al., 2010; Ladhari and Tchetgna, 2015; Ruggeri et al., 2019).
Traditionally, the United States (US), United Kingdom (UK) and Europe have dominated markets for certified products. Today an estimated 125 countries sell more than 30,000 Fairtrade-certified products (Ruggeri et al., 2019). In addition to the specialist stores where this movement originated, Fairtrade products are now sold through conventional supermarkets and online market channels (Doran, 2009; Ladhari and Tchetgna, 2015). In Australia, Fairtrade products have expanded to be available in supermarket chains, speciality shops and online, with coffee and chocolate being the dominant food items. In addition, some large companies (e.g., Origin Energy and Lonely Planet) have introduced Fairtrade-certified tea and coffee in their Australian offices (Krier, 2008).
One of the principal specialist retailers of Fairtrade products is Oxfam, an international not-for-profit confederation of 20 independent charitable organisations focusing on reducing global poverty in 87 countries around the globe. Results of a 1994 survey conducted in the UK, which indicated 81% of consumers would buy products that returned more money to producers (Nicholls, 2002), led Oxfam to significantly expand its global retail networks. Oxfam Australia, one of the success stories, increased sale volume 50-fold over a three-year period from 2003–2006 (Krier, 2008). By late 2007, Fairtrade Labelling Association of Australia and New Zealand (FLAANZ), the company responsible for Fairtrade licenses, had approved 123 licensed partners to sell Fairtrade products in Australia.
At the time of this study, Oxfam Australia operated 13 retail stores, an online ‘Oxfam Shop’ and a wholesale business supplying Oxfam-branded coffee, tea and chocolate to Australian supermarkets.2 When Oxfam Australia was approached about the opportunity to be part of a Pacific aid project to explore opportunities for smallholder farmers, they agreed to be part of the project and offered access to their database of 55,000 predominantly Australian donors, retail customers and mailing list subscribers. The database provided the means for exploring Oxfam’s customer base for the dual purpose of understanding a market opportunity for Pacific exporters as well as informing Oxfam management decisions about developing new product lines.
2.3 Ethical consumer segmentation
While research on ethical food consumption has been conducted in other geographical regions, notably in developed countries in the Northern Hemisphere, studies in emerging and culturally diverse countries have been rare (Hughes et al., 2015). The global and local context, particularly the region’s culture, is pivotal in shaping ethical consumption (Al-Khatib et al., 1997; Le and Kieu, 2019). Findings from studies in other regions do not always translate well to the Australian context, where there has been limited research to date (Brenton, 2013; Burke et al., 2014; Cheah and Phau, 2011; Chowdhury and Fernando, 2014; O’Connor et al., 2017). The size of the ethical consumer market in Australia has not been quantified, but there are indications that it is significant. In 2013 a nationally representative sample of 1014 Australians responded to an online survey where 27.3% said they were frequent purchasers of ethically labelled products (Brenton, 2013). Similarly, an online survey of 200 Australians in 2014 found that 42% purchased ethical product (Burke et al., 2014). These studies were more general in nature and we are unaware of any research characterising ethical consumption based on potential preferences for food products originating from a particular region, in this case, the Pacific.
Cluster or factor analysis techniques have been used to classify groups of consumers on the basis of differing ethical motivations from the vantage of a particular country, including the UK (Bucic et al., 2012; Varul, 2009); US (Long and Murray, 2013; Uddin and Gallardo, 2021); Canada (Ladhari and Tchetgna, 2015); Germany (Varul, 2009); Belgium (De Pelsmacker and Janssens, 2007); Spain (Palacios-González and Chamorro-Mera, 2020); Turkey (Gunden et al., 2020); Nepal (Adhikari et al., 2012); and Vietnam (Le and Kieu, 2019). Specific products, such as coffee in South Africa (Lappeman et al., 2019) and Poland (Maciejewski et al., 2019), honey in Spain (Sama et al., 2018), juice in Brazil (Prell et al., 2020), and vegetables in Kenya (Macharia et al., 2013) have also been the focus of previous ethical food consumption studies.
Several studies using Fairtrade-related data have yielded multiple classifications of consumers, including on the basis of (a) a positive disposition to Fairtrade principles and ethical products, (b) a negative disposition or (c) indifference (Burke et al., 2014; Gunden et al., 2020; Verain et al., 2016). Not only are Fairtrade ‘lovers’ willing to pay more, Fairtrade ‘likers’ are believed to be amenable to buying Fairtrade products if marketing messages are more informative (De Pelsmacker et al., 2005). Clearer labelling and strategic marketing have the potential to overcome consumer scepticism and confusion, which are significant barriers to ethical consumption, another study found (Burke et al., 2014). More recent research segments ethical consumers slightly differently: (1) ‘Fairtrade consumers’ who value the type of production, (2) ‘local consumers’ who value the origin, and (3) ‘price sensitive’ consumers who don’t value socially or environmentally responsible products (Sama et al., 2018). Research has also shown the advantage of comparing different food categories (Verain et al., 2016), especially with a product like coffee, where consumers have different levels of product-related sophistication (Maciejewski et al., 2019).
3. Methods: data collection and analysis
3.1 Data collection
Oxfam Australia was actively involved in developing the survey instrument to ensure that the insights gained could directly inform and influence management decisions on the development of the product range and future negotiations with Pacific exporters. On this basis, Oxfam Australia provided access to their database of 55 000 registered subscribers. We agreed that an online questionnaire would be the most practical and efficient method to collect quantitative data from the existing consumer base. While there are some disadvantages of online surveys (Shih and Fan, 2008), the benefits of flexibility, low cost, and quick access to a target group (Evans and Mathur, 2005; Roberts and Allen, 2015) made online surveys a better option for this research study than traditional survey methods (e.g. intercept, mail out or telephone survey).
The Oxfam survey was conducted from August to September, 2018 (16 days) using an established online platform called ‘Qualtrics’. Ethics approval was obtained from a University Human Research Ethics Committee (number H-2018-127). The voluntary survey was sent to all 55 000 Oxfam Australia members over the age of 18, and the anonymous data was returned to the researchers once the survey period had closed. As an incentive, respondents who completed the survey in full were entered into a draw for a chance to win a hamper filled with Pacific products plus a $100 Oxfam gift voucher. Oxfam awarded ten hampers and 10 gift cards with a total value of $2000.
The survey instrument was developed following a literature review on ethical consumers and a discussion with Oxfam Australia on their priorities for understanding opportunities for purchasing products from the Pacific. The survey was comprised of four key areas: (1) socio-demographics; (2) purchasing behaviour at Oxfam retail outlets, both bricks-and-mortar and online; (3) consumer preferences; and (4) opportunities for Pacific products. The ‘socio-demographics’ section asked questions about age, gender, residential location, education level, income and other household characteristics. The section on ‘Oxfam purchasing’ asked respondents about their existing purchasing behaviour, which market channel they used, what types of products they bought and how often. The questions within ‘consumer preferences’ investigated which attributes were important when purchasing these products. The final section of the survey instrument focussed on the Pacific and asked respondents about their previous travel, which countries and what products they were most interested in purchasing and why.
Of the 55 000 Oxfam Australia subscribers, 1030 consented to participate in the survey, resulting in 930 fully completed surveys included in the analyses. For the detailed analyses involving food products, only 637 survey responses were used, as this is the number of respondents that answered yes to purchasing food from Oxfam in the last two years. While this reduces the sample size, the responses from this particular cohort were considered to be much more relevant to the goals of the research study.
3.2 Data analysis
A Latent Class (LC) Cluster Analysis was performed to segment ethically conscious Australian consumers based on their responses to several survey questions regarding Pacific food products. One of the advantages of using LC Cluster Analysis is that it can accommodate variables with different scale types (Vermunt and Magidson, 2002). We used both categorical and continuous variables as indicator variables in the current analysis. Additionally, formal criteria can be used to decide the optimal number of clusters and other model features (Vermunt and Magidson, 2002).
Two sets of indicator variables were used in the LC Cluster Analysis to segment the consumers. The first set of indicator variables (categorical) included consumers’ reasons for buying food products from Oxfam. In this section of the survey, respondents were asked to indicate or select their reasons for purchasing different products from Oxfam. Five reasons were included: quality, price, story behind the product, functionality, and uniqueness. Respondents were asked to select the one reason that best described why they purchase these products, and then each reason was subsequently coded with one (1) if the respondent considered that reason when buying from Oxfam and zero (0) otherwise. Only responses to the questions related to food were included in the analyses.
The second set of indicator variables was derived from respondents’ rating of a range of food-category attributes important to them when buying Oxfam products. This question in the survey used a five-point Likert-type scale with end points ‘not at all important’ and ‘extremely important’. A Principal Component Analysis (PCA) with varimax rotation was applied to the 16 food-category attributes to reduce the number of items and estimate the underlying factors that represent the characteristics of the original attributes in a simplified manner.
Food attribute importance ratings: Items and factor loadings (PCA)
Citation: International Food and Agribusiness Management Review 27, 2 (2024) ; 10.22434/ifamr2023.0009
Summary statistics of cluster membership and indicator variables by cluster
Citation: International Food and Agribusiness Management Review 27, 2 (2024) ; 10.22434/ifamr2023.0009
Summary statistics of respondents’ socio-demographic characteristics by cluster
Citation: International Food and Agribusiness Management Review 27, 2 (2024) ; 10.22434/ifamr2023.0009
Food shopping behaviour by cluster
Citation: International Food and Agribusiness Management Review 27, 2 (2024) ; 10.22434/ifamr2023.0009
Interest in products from Pacific Countries
Citation: International Food and Agribusiness Management Review 27, 2 (2024) ; 10.22434/ifamr2023.0009
The Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy and Bartlett’s test of sphericity were used to check the suitability of PCA in reducing the number of items. KMO values range between zero and one. Values above 0.50 (either for individual variable or entire matrix) indicate the appropriateness of applying PCA (Hair et al., 2010). In the analysis carried out, the estimated mean value of the KMO measure of sampling adequacy was 0.85, suggesting that performing PCA was appropriate. The Bartlett’s test of sphericity was significant at the p = 0.000 level, rejecting the hypothesis that the correlation matrix was an identity matrix and accepting the alternative hypothesis of significant relationship between the food-category attributes used in the PCA (Hair et al., 2010). After checking the suitability of PCA in reducing the number of items using the KMO Measure of Sampling Adequacy and Bartlett’s Test of Sphericity, communalities were then examined. Communalities less than 0.40 were removed one at a time (Costello and Osborne, 2005).
Of the 16 attributes, 12 were retained after considering communalities. PCA was performed on 12 items/ attributes, and the number of components retained was based on eigen values greater than one. Based on this criterion, three components were retained. The three retained components explain 55% of the total variance of the food-category attributes considered most important by the respondents. The first component captures attributes related to ethical values (i.e. ethical, certified Fairtrade, helps local producers, and origin). The second component reflects attributes related to experience and connection of the consumer to the product(s) (i.e. experiences in the country of origin, using traditional methods, emotional connection). The last component includes attributes that reflect self-focused factors (i.e. price, taste, size, appearance, and packaging). These three components are consistent with the findings of Verain et al. (2016), one of the first studies to show the importance of using food category attributes as a basis for consumer segmentation, including the grouping of attributes related to a self-focused set of food choice motives.
Regression factor scores were then calculated in SPSS and were used as continuous indicator variables in the cluster analysis. The LC Cluster Analysis was performed using Latent Gold 6.0. Models ranging from one- to 10-clusters were estimated. The optimal number of clusters was chosen by comparing the Bayesian Information Criterion (BIC): the lower the value, the better the model (Vermunt and Magidson, 2016). Based on this criterion, a four-cluster solution was selected.
Post-hoc analysis was performed to characterise and examine whether there are differences between the segments in terms of consumers’ motivations or reasons for buying food products from Oxfam and the importance ratings of food attributes. The clusters were also characterised by their socio-demographic characteristics, food shopping behaviour and interest in products from Pacific countries. The goal was to better understand the unique segments of ethically conscious Australian consumers.
4. Results
4.1 Product attributes
The survey collected information on what product attributes were important to Oxfam consumers by asking respondents to rate the importance of several food product attributes when purchasing from Oxfam. Table 1 summarises the factor loadings for 12 of those attributes and motives, which have been allocated to three broader factors:
Factor 1 Ethical values: which include four attributes – ‘ethical’, ‘certified Fairtrade’, ‘helps local producers’ and ‘origin’.
Factor 2 Experience and connection: includes three attributes – ‘experiences in the country of origin’, ‘using traditional methods’ and ‘emotional connection’.
Factor 3 Self-focused motives: which includes five attributes that are closely aligned to respondents’ own personal benefits — ‘price’, ‘taste’, ‘size’, ‘appearance’ and ‘packaging and labelling’.
4.2 Cluster formation
This section addresses the segmentation of Oxfam consumers by providing insight on how they can be differentiated based on their buying preferences, purchasing behaviour and socio-demographic characteristics.
LC Cluster Analysis was used to determine if there were distinct segments of Australian Oxfam consumers based on their reasons for buying different products. After assessing the BIC values, a four-cluster solution was deemed optimal (Vermunt and Magidson, 2016). Each of these clusters is characterised in Tables 2–5 below. Cluster 1 (49.9%) and Cluster 2 (33.4%) constitute the largest two segments at a combined 83.3%. Clusters 3 and 4 were much smaller, accounting for 9.4% and 7.2% of respondents, respectively. ‘Quality’ and ‘Price’ were more important to Clusters 4 and 2, while the ‘Story’ behind the product and ‘ethical’ values were more important to Clusters 1 and 4. ‘Functionality’ was more important to Cluster 4, while uniqueness was valued by Clusters 3 and 4. ‘Experience and connection’ were more important to Cluster 4, and self-focused attributes were less important to Cluster 1.
As a result of these insights, the clusters have been named to better reflect their reasons for purchasing food from Oxfam:
Cluster 1: ‘Selfless’: Consumers’ purchasing behaviour did not focus on themselves. Story and ethical values were more important to them, and they were less concerned about price, quality, or functionality.
Cluster 2: ‘Practical’: Quality and price were the most important to these consumers.
Cluster 3: ‘Unique’: Product uniqueness was emphasised by consumers when purchasing from Oxfam.
Cluster 4: ‘Want it all’: This cluster placed relatively high importance on most categories. They indicated that quality, price, story, functionality and uniqueness were highly important, while high ethical values, experience and connection were also important. This cluster had the highest rating for focus on self.
Notably, the highest total mean score for all attributes across all four clusters was the ‘story’ behind the product, which 68% of respondents deemed important to them, followed by ‘quality’ (31%). Only 6% of respondents said that ‘price’ was important, indicating that this group of respondents generally may be willing to pay more for the attributes they value.
Table 3 provides the socio-demographic characteristics of the sample. Survey respondents were predominantly female (88.77%), and a majority were aged over 35 (78.41%). Due to confidentiality, the characteristics could not be directly compared to the broader Oxfam Australia’s membership base, but an interview with Oxfam Australia’s national marketing manager verified that the sample demographic was consistent with the wider membership base (S Allan, personal communication, 7th June, 2019). This result provides support for Bucic et al. (2012) who found female consumers are more strongly guided by ethical values. The analysis showed no significant difference in living arrangements and income levels across the four clusters.
Consumers in Cluster 4 (‘Want it all’) were younger. The largest single cohort in this cluster (38.46%) was between 25–34 years old, which matches their higher rate of early career study (Graduate Certificate and Graduate Diplomas). Cluster 1 (‘Selfless’) had the greatest proportion of respondents with postgraduate degrees.
Food shopping behaviour is compared across the clusters in Table 4. Respondents from Cluster 3 (‘Unique’) were less likely to be frequent purchasers of food from Oxfam, which fit their label of looking for unique products. Conversely, Cluster 4 (‘Want it all’), were much more likely to buy food from Oxfam every week or every few months. They were also more likely to purchase products online, which is consistent with the youth (between the ages of 25 and 34) of a high proportion of respondents (38.5%) in this group. By far, the largest proportion of respondents in all clusters (total mean 65.93%) shopped at Oxfam shops.
4.3 Differences across Pacific countries
This section considers whether Oxfam consumer segments perceive Pacific countries differently. Table 5 compares interest (across segments) in products from the Pacific. More than 60% of respondents expressed an interest in food products from all four Pacific countries listed (Fiji, PNG, Solomon Islands and Vanuatu). Cluster 4 (‘Want it all’) were the most enthusiastic about purchasing food products from Pacific countries. An average 82.8% in this group expressed an interest; none said they were not interested.
5. Discussion
This research contributes to the literature on ethical consumption in several ways. First, the study supports and adds to the growing body of research targeting the social aspects of ethical consumerism, which are less studied than the environmental aspects (Bangsa and Schlegelmilch, 2020). Second, the research provides insight useful for food producers in Pacific SIDS, in contrast to previous research which focused on consumers in large, developed countries (e.g. US, UK, Europe), as well as large, densely populated developing economies (e.g. China and India) (Bangsa and Schlegelmilch, 2020). Third, the study was conducted with a specific aim of helping aid organisations and donors to government development programs to reduce poverty among smallholder farmers and others in primary production value chains who constitute the economic backbone of disadvantaged Pacific countries. Our study is the first to segment ethical food consumers relative to poverty-reduction opportunities in the Pacific via a LC cluster analysis. Finally, it provides practical information useful to Oxfam and Pacific Island exporters.
A key insight across all Australian Oxfam respondents is that price is very low on their priority list, which makes them an ideal target audience for Pacific exporters who are unlikely to compete as low-cost producers. Much higher on the consumer priority list is the ‘story behind the product’, which is consistent with Park (2018), who found that the stories are critical to engaging consumers on ethical grounds. Marketing ‘stories’ is something that the Pacific can do quite well, as exemplified by the case of Fiji Water (Connell, 2006).
While the insight gained from the 637 ethical food consumers at an aggregate level is helpful, the real benefit comes from segmenting this group relative to buying preferences, purchasing behaviour and socio-demographic characteristics. These insights can then be used to understand the individual drivers of each cluster so that marketing efforts can be more targeted. Studies have shown different segments of consumers with varying levels of passion for ethical purchases (Macharia et al., 2013; Palacios-González and Chamorro-Mera, 2020). The present study has gone a step further and identified different levels of passion within an already ethically conscious consumer base, in line with suggestions by other researchers for increasingly segmented studies because ethical consumers are not all the same (Bucic et al., 2012; Gorman et al., 2004).
The segmentation of a niche market does make it difficult to quantify the size of the market opportunity. However, this risk is mitigated by Pacific exporters typically being smaller rather than larger corporate enterprises. The types of exporters who can fulfil the expectations of ethical consumers and tell a ‘story’ about their products and the benefits back to farmers are not looking for large markets. The challenge for exporters in the Pacific is to understand what this opportunity looks like for them, whether that is Oxfam, Fairtrade, or simply having a clear awareness of their own products’ unique story and selling points when navigating different channels into a range of global markets.
Although countries like Fiji and Vanuatu have much higher tourist intakes than PNG and the Solomon Islands, and all are culturally and linguistically distinct, our survey suggests that Australian Oxfam supporters perceive the four countries as a group, or very similar and previous travel was not a significant factor. This insight provides useful direction for funding agencies and Pacific governments looking to promote exports from the region and opens up the possibility for more ‘Pacific-wide’ marketing initiatives. Respondents’ considerable interest in products sourced from the Pacific across the board is also relevant to Oxfam and the Pacific producers, processors and exporters capable of capitalising on the market opportunity presented by ethical consumerism. There were no clear standouts for Pacific products of interest, but some of the food products mentioned by respondents included chocolate, coffee, virgin coconut oil, spices, tea, vanilla and indigenous nuts.
Despite their association with Oxfam, respondents in two of the four clusters appeared less likely to be swayed principally by ethical considerations in their purchasing decisions. Cluster 2 (‘Practical’) consumers were more focused on quality and price. While some value-added Pacific food products may satisfy these criteria, the region is not a low-cost producer, which would make most products less attractive to this cohort. Similarly, Cluster 3 (‘Unique’) consumers were more interested in highly distinctive and rare products. While that does not prevent them from buying Pacific food products, the analysis suggests they are likely to purchase less often and may not be willing to pay higher prices for the ethical aspects of products.
By contrast, Cluster 1 (‘Selfless’) and Cluster 4 (‘Want it all’) respondents appear to be much more promising potential targets for Pacific exporters, Cluster 1 (‘Selfless’) consumers being key. As the cluster name suggests, these consumers are less driven by their own advantage and have strong, ethical values focused on the welfare of others. At 49.9% of the Oxfam sample, ‘Selfless’ may provide a potentially lucrative market for Pacific-sourced products that target ethical consumers. Support for this claim comes from a consumer study of Amnesty International supporters, who were found to place greater importance on the ethical features of products they purchased than did university students in Hong Kong and Australia (Auger et al., 2008). Cluster 4 (‘Want it all’) consumers, although comprising the smallest proportion of the sample (7.2%) in this study, also show promise as a potential target given the high importance they place on the ‘story’ behind the product, which was equal to Cluster 1 (‘Selfless’) and higher than any other attribute except ‘uniqueness’.
Our research has implications for a range of stakeholders, starting with Oxfam. The feedback from these Oxfam subscribers about the significance of the story behind the product reinforces previous research on the importance of the whole value chain being part of the marketing message to engage ethical consumers (Zerbini et al., 2019) and the need for this information to be transparent across all stakeholders (Toussaint et al., 2021). Oke et al. (2020) further suggested these marketing messages must stress the social benefits that accompany the purchase. If these messages can be communicated effectively to consumers, they can form a point of differentiation against market competitors (Haynes et al., 2012).
Despite its value, the study has important limitations. One is the gap between the intention to purchase ethical products and actual purchasing behaviour, highlighted by other researchers (Bray et al., 2011; Burke et al., 2014; Carrington et al., 2014). This gap is somewhat mitigated by surveying consumers who have already committed to supporting an ethics-driven non-profit organisation, but we have not matched their survey responses with any actual purchasing behaviour, data for which was unavailable. A second limitation is the survey sample itself. Although the online survey was offered to all 55 000 Oxfam subscribers and the sample size is a respectable 637 respondents, it cannot be considered fully representative of Oxfam subscribers, or the wider Australian cohort of ethically conscious consumers. It also must be noted that the respondents are predominantly Australian, so while this study adds to the global literature in this field, care is needed when extrapolating these findings across Oxfam consumers around the globe or the broader ethically conscious consumer base.
These limitations highlight the need to repeat ethical consumer studies across different countries, sectors, products and even timelines to provide information about consumer behaviour in a way that can be most valuable for developing countries like SIDS and the Pacific countries.
6. Conclusion
This study is the first of its type to link the value chain between the growing number of ethical consumers wanting to satisfy their social ethics-based goals with producers in Pacific SIDS desperate for market opportunities matching their competitive strengths.
The survey of 637 ethically conscious Oxfam subscribers found they are very interested in food products from all four Pacific countries studied: Fiji, PNG, the Solomon Islands and Vanuatu. Further analysis and segmentation of these consumers identified the importance of a product’s origin story and a heightened market opportunity for two of the clusters: Cluster 1 (‘Selfless’) and Cluster 4 (‘Want it all’) through traditional as well as online market channels. Engaging with these consumers and translating their interest into actual sales will require the whole value chain, including Pacific producers, to communicate a transparent marketing message on how these products meet their ethical needs and differentiate themselves from the competition.
This paper makes three primary contributions. First, it provides direct insights for Oxfam and Pacific exporters looking to target new niche market opportunities. Second, it offers broader insights to Pacific governments and aid organisations looking to alleviate poverty through smallholder farmer-inclusive development programs. Finally, the research contributes to the socially focussed ethical consumerism literature by providing the context of Pacific emerging economies and at a level of detail achieved by the segmentation of an already ethically conscious consumer group, which is rarely explored.
In the future, it is hoped that the research approach used here will be repeated in other emerging economies to benefit a full range of private sector, government, NGO and academic stakeholders.
Acknowledgements
The authors acknowledge the project funding received from the Australian Centre for International Agricultural Research (ACIAR) and would like to thank the management and staff of Oxfam Australia for their support and guidance in the development of the survey and for allowing us access to their substantial subscriber database.
Conflict of interest
We declare that there are no conflicts of interest attached to this manuscript.
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Corresponding author
Of the 11 Pacific island countries included in the IMF analysis, 3 are outliers in terms of per capita GDP (PPP): Kiribati’s is below USD$2000, while Nauru (USD$10 010) and Palau (USD$15 080) are much higher. Nauru’s GDP has been enhanced by Australia’s offshore immigration program. Palau is closely associated with the United States and enjoys relatively high levels of foreign aid from that country and Japan.
More recently, Oxfam closed their physical retail stores, but have continued their online and wholesale businesses.
